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Sequential location under one-sided demand uncertainty

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  • Bonein, Aurélie
  • Turolla, Stéphane

Abstract

In entering a new market, firms face demand uncertainty. We depart from the usual Hotelling duopoly model with sequential entry. We allow firms to locate outside of the city and assume that market conditions are common knowledge. We then introduce one-sided demand uncertainty. We find that demand uncertainty can be seen as a differentiation force when faced by the first entrant and as an agglomeration force when faced by the second entrant. Finally, the second firm's imperfect information implies higher welfare losses.

Suggested Citation

  • Bonein, Aurélie & Turolla, Stéphane, 2009. "Sequential location under one-sided demand uncertainty," Research in Economics, Elsevier, vol. 63(3), pages 145-159, September.
    • Handle: RePEc:eee:reecon:v:63:y:2009:i:3:p:145-159
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    Cited by:

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    2. Aurélie Bonein & Stéphane Turolla, 2023. "Spatial competition with demand uncertainty: A laboratory experiment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(4), pages 906-939, October.
    3. Nalca, Arcan & Boyaci, Tamer & Ray, Saibal, 2018. "Brand positioning and consumer taste information," European Journal of Operational Research, Elsevier, vol. 268(2), pages 555-568.
    4. Jianhu Zhang & Changying Li, 2013. "Endogenous timing in a mixed oligopoly under demand uncertainty," Journal of Economics, Springer, vol. 108(3), pages 273-289, April.
    5. Bonein, Aurélie & Turolla, Stéphane, 2009. "Sequential location under one-sided demand uncertainty," Research in Economics, Elsevier, vol. 63(3), pages 145-159, September.
    6. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.
    7. Meagher, Kieron J. & Wong, Arlene & Zauner, Klaus G., 2020. "A competitive analysis of fail fast: Shakeout and uncertainty about consumer tastes," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 589-600.
    8. Arcan Nalca, & Tamer Boyaci, & Saibal Ray, 2017. "Consumer taste uncertainty in the context of store brand and national brand competition," ESMT Research Working Papers ESMT-17-01, ESMT European School of Management and Technology.
    9. Yang, Xiaodong & Cai, Gangshu (George) & Chen, Ying-Ju & Yang, Shu-Jung Sunny, 2017. "Competitive Retailer Strategies for New Market Research, Entry and Positioning Decisions," Journal of Retailing, Elsevier, vol. 93(2), pages 172-186.
    10. Young Kwark & Jianqing Chen & Srinivasan Raghunathan, 2018. "User-Generated Content and Competing Firms’ Product Design," Management Science, INFORMS, vol. 64(10), pages 4608-4628, October.

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